THE

CANADIAN LAW TIMES.

A

FEBRUARY, 1903.

NOTICE OF DISHONOUR.

NOTICE of dishonour must be given by or on behalf of

the holder, or on behalf of an indorser, or by an agent of the holder: Bills of Exchange Act, s. 49. The agent may give the notice in the name of his principal, or in his own name, and the holder need not be interested in the bill or note: s. 49, s.-S. 2. The expression "holder" means the payee or indorsee of a bill or note who is in possession of it, or the bearer thereof; a person to whom a bill is sent for collection is a holder: Allison v. Central Bank, 4 Allen N. B. 270.

If the notice is given on behalf of the holder, it enures for the benefit of all prior or subsequent parties to the bill: s. 49 (c); and if the indorser gives such notice it enures for the benefit of the holder and all indorsers subsequent to the party to whom the notice is given: s. 49 (d).

The notice may be in writing, or by personal communication, and in any terms that may identify the bill. It has been held in the United States that a notice by telephone is sufficient: Thompson v. Appleby (Kansas S. D. C. A., 1897), 48 Pac. R. 933. The difficulty of identifying the party spoken with makes such a method of communication dangerous. A telegraphic communication should also be sufficient and better than the telephone.

A letter with a notice of dishonour was forwarded in time to the wrong branch bank. Next day a telegram was sent to the proper branch, which sent off its notices in time. It was held that the bank had received due notice of dishonour. Collins, L.J., dissented, holding that for the purpose of notice

VOL. XXIII. C.L.T

4

of dishonour the branches of a bank must be regarded as distinct, that the written notice by the London bank, not having been sent to their principals, was ineffective, and could not be made effective by the telegram, which was out of time: Fielding v. Corry, [1898] 1 Q. B. 268.

Upon the same reasoning as the above decision a telegraphic notice of dishonour, which would reach the party entitled to notice as soon as a mailed notice, would be sufficient, although sent after the time such notice should have been posted. It is possible that the Court thought that, as the party to whom notice had been sent had not suffered by any laches of the holder, he had nothing to complain of. It is doubtful if this decision would be law in Canada, for the English Act says that the notice must be sent within a reasonable time (see English Act, s. 49, s.-s. 12); ours, not later than the next day after the dishonour of the bill.

For commercial purposes the English rule established by Fielding v. Corry is the best, for the party receives the notice quite as soon, if not sooner, than the mailed notice, and is not in any way damaged.

The return of the bill to the drawer is a sufficient notice to him (f). The return of the dishonoured bill to an indorser is a sufficient notice to him.

A notice need not be signed, and an insufficiently written notice may be supplemented by an oral notice. A misdescription of the bill will not invalidate unless the party is in fact misled thereby. Describing the bill as payable at S. Bank, when it is payable at T. Bank: Bromage v. Vaughan, 9 Q. B. 608; a note as a bill of exchange: Stockman v. Parr, 11 M. & W. 809; transposing the names of the drawer and acceptor: Mellerish v. Rippen, 7 Ex. 578; describing acceptor by wrong name: Harpman v. Child, 1 F. & F. 652: may be sufficient.

And generally it may be stated that notices of dishonour are construed liberally: Chalmers, 158.

A notice may be given to an agent for his principal (h), but in the case where the agent represents two principals the Court has to be satisfied that when the agent received the notice he acquired the information under such circumstances

as that it was his duty to communicate it to himself in his other capacity: Deep Sea Fishery Company's Claim, [1902] 1 Ch. 50%. The proper way would be for the holder to serve notices for both parties on the agent (c).

In a case where the party to a bill had assigned for the benefit of his creditors, it was held in the United States that a notice left at the office in charge of his trustee was sufficient: Bank of America v. Shaw, 142 Mass. 290; American National Bank v. Junk, 28 L. R. A. 492; contra, House v. Vinton National Bank, 43 Ohio St. 346. In this latter case McIlvaine, C.J., says: "And again, the difference between the bankrupt law, which absolves the bankrupt from all future liability on debts provable against his estate, and our insolvent laws, might possibly require different conclusions in respect to the effect to be given to notice served on the assignee."

The following was held a sufficient notice to husband and wife through husband as agent for wife: "I beg to advise you that T. C. L.'s note for $3,500 in your favour, and indorsed by yourself and wife, and held by our estate, was due yesterday. As I have not received renewal, will you kindly see that same is forwarded with cheque for discount, as there is no surplus on hand:" Counsell v. Livingston, 21 Occ. N. 563, 2 O. L. R. 582; 22 Occ. N. 360, 4 O. L. R. 340.

Partners are agents for each other, and therefore notice to one is notice to the firm of the firm's bill or note. Where the notice is not mailed to the firm under s.-s. 4, it is well to leave the notice at the place of business of the firm and not deliver it in the street to a member of the firm. After a dissolution of the firm each member should have notice.

Where there are two or more indorsers or drawers, not partners, each must have notice unless one of them has authority to receive for the other.

In Balloch v. Binney, 2 Kerr N. B. 440, where the bill was dated at Moncton; Gray, counsel, argued: "The bill is dated at Moncton; therefore a notice addressed to the defendant at that place is sufficient, because the inference is that he lives there. In Mann v. Moors, Ry. & M. 249, the bill was dated Manchester; and Abbott, C.J., held that a notice of dishonour put into the post office addressed to Mr. Moors,

Manchester, was sufficient. For the sake of convenience, it ought to be inferred that the drawer resides where the bill is dated; at all events in such case very slight evidence is sufficient." The Court, through Chipman, C.J., did not accede to this argument, and thought Moncton not definite enough, that it might mean a large parish, etc., therefore evidence should have been given as to where Moncton was and the course of the post.

In 1874 the Dominion Parliament passed an Act, which was afterwards embodied in R. S. C. c. 123, s. 5, by which it was provided that a notice of dishonour was sufficiently given, if addressed in due time, to any party to such bill or note entitled to such notice, at the place at which such bill or note was dated, unless any such party had under his signature designated another place, and that such notice should be sufficient notwithstanding it was not the true address of the party.

In Cosgrave v. Boyle, 6 S. C. R. 165, the Act of 1874, R. S. C. c. 123, s. 5, came up for discussion. The note was dated at Toronto, 5th November, 1878, payable four months after date, and fell due 8th March, 1879. On this latter day it was protested by the notary and notices mailed to M. P., the maker, at Toronto, J. S., indorser, Toronto, and Messrs. Cosgrave, indorser, Toronto. J. S. died 5th December, 1878, one month after the note was made and three before it fell due. J. S. did not designate any address under his signature on the note; his address was Lansing. Neither the holders nor notary knew of his death when the note matured. Counsel contended that the statute did not displace the rules of the common law. Ritichie, C.J., said: "I think the holder bank fulfilled its duty when it sent the notice to the place at which the note was dated. . . . The statute was passed, in my opinion, to relieve holders from the difficulties and risks so likely to arise from the necessity of observing the very strict technical rules in regard to notices of dishonour, and, instead of requiring such notices of dishonour to be sent to the residence or place of business of drawers and indorsers

. . and imposing on holders the burthen of discovering the proper address to which notices should be sent, substituted, in lieu of the implied contract in respect thereto, a

statutory contract by which the holder was relived from all difficulty and risk, by enacting that all notices should be sufficient, if addressed in due time to the party upon whom liability was to be fixed, at the place at which the note was dated, unless another place is designated." He further said that he thought the representative had the same right as his testator, and no other or greater right. Strong, J., said: " But it appears plain on principle that if the right of action is once fixed and absolute in the holder, a subsequent indorser taking up the paper is subrogated to his rights." Gwynne, J., said: And the notice having been good and sufficient notice given by the holders at maturity to the payee, enures to the benefit of the plaintiff, notwithstanding that he was aware of the decease of the payee; a contrary decision would defeat what I cannot but take to have been the object of the statute, namely, to relieve holders of overdue notes and bills from all anxiety and difficulty arising by reason of their being ignorant of the actual place of residence of the parties on the note or bill, or of the fact appearing here, namely, the decease of the party to whom notice was addressed."

The Bills of Exchange Act, s. 49, s.-s. 4: "Notice of the protest or dishonour of any bill payable in Canada shall, notwithstanding anything in this section contained, be sufficiently given if it is addressed in due time to any party to such bill entitled to such notice, at his customary address or place of residence or at the place at which such bill is dated, unless any such party has, under his signature, designated another place; and in such latter case such notice shall be sufficiently given if addressed to him in due time at such other place; and such. notice so addressed shall be sufficient, although the place of residence of such party is other than either of such above mentioned places; and such notice shall be deemed to have been duly served and given for all purposes if it is deposited in any post office, with the postage paid thereon, at any time during the day on which such protest or presentment has been made, or on the next following juridical or business day; such notice shall not be invalid by reason of the fact that the party to whom it is addressed is dead."

It will be noticed that the Legislature adopted the law as laid down in Cosgrave v. Boyle.